Meeting with Norilsk Nickel CEO Vladimir Potanin

Vladimir Putin had a working meeting with Norilsk Nickel CEO Vladimir Potanin.

December 10, 2018

15:05

Novo-Ogaryovo, Moscow Region

Meeting with Norilsk Nickel CEO Vladimir Potanin.

President of Russia
Vladimir Putin: Mr
Potanin, nature protection is among your priorities, as far as I remember. I know that you are working on this. Let us begin with this subject.

Norilsk Nickel
President and Chairman of the Management Board Vladimir Potanin: You are right, Mr President. We are
paying much attention to the environmental problems we have inherited [from the past]. As I told you before, we will have resolved these problems by 2023 by reducing
the amount of sulphur dioxide emissions by 75 percent.

We will produce sulphuric acid by neutralising the sulphur emissions
based on Russian technology and store the output in a safe place.

We will invest some 150 billion rubles in this programme, which is a great deal for us. We hope to receive financial assistance from the state for the implementation of this programme.

We are working together with the authorities, including the federal
government and regional bodies, which understand and support us.

We are not being idle. In 2016,
we shut down our oldest nickel plant [in Norilsk], which was built back in 1942.

It stood within city limits and hence did the greatest damage to the environment. [By closing it,] we have reduced the emissions by 30–35 percent.

This year we have launched a new project at our copper plant. It is the second oldest and the second most obsolete plant, which means we have entered
the second environmental protection phase.

Next year we will launch the third and final phase at our largest and most modern Nadezhda plant.

Overall, we will implement the requirements of the regulatory bodies and the state and will report on this in 2023.

But we would like the people to feel the effects of our programme much
sooner. The air in the city no longer smells of sulphur so much now that we
have shut down the copper plant.

When we complete the project at our other copper plant, the air
pollution problem in the city will be settled, and we will only need to report
on air pollution throughout the region.

It should be pointed out that we have reduced emissions to the permissible level at Kola MMC, which is our second largest production unit. We
will further half the emissions by 2020 by completing a modernisation programme
there.

This will have the greatest effect on the cities for which we are
responsible, because these are mostly single-industry cities where we are the only employer.

But they are located on the border with Norway and Finland, so that our
neighbours will have to admit that we are dealing with environmental matters
and will not pollute their territories, for example.

Vladimir Putin: As far as I know, you are using the latest methods to solve these problems, including the advantages of the digital
economy. What exactly are you using?

Vladimir Potanin: Yes, we are working energetically
to introduce digital technology at our plants. You know, Mr President, five or seven years ago we never thought this would be possible.

It allows us to pinpoint and deal with any flaws in the technological
process, improve the quality of output, as well as enhancing labour efficiency
and robotising management work.

I must say I believe that our company will dramatically change within five
or seven years. There will be fewer people doing hazardous jobs and even fully
robotised workshops, and we will learn to take more care of the natural
resources, which we are developing under state licences.

We have started an ambitious retraining programme, because we will need
personnel for different kinds of jobs.

I believe that we will accomplish all of this at our company, and I know
that many other companies in the country are doing the same. Therefore, we hope
that our technology will find a market, just as we hope to be able to use other
Russian companies’ technology.

Vladimir Putin:
What are the overall indicators for this year?

Vladimir Potanin: The overall performance indicators remained steady compared to last
year, while the output of metals increased by three or four percent, and profitability
was also steady, and even improved.

If you allow me, I would like to say
a few words about one of the aspects related to the use of digital technology.
As a matter of fact, there are dozens of digital initiatives underway across
the group.

I am especially delighted that these
are grassroots initiatives promoted by rank-and-file IT staff and technology
experts working on the ground and coming up with initiatives designed to streamline operations in various fields of technology.

Even though we have only a couple
dozens of initiatives in the budget and the business plan, the first pilot
projects have already produced returns worth millions of rubles.

Vladimir Putin:
How do you motivate people to engage in initiatives of this kind?

Vladimir Potanin: We give a share of the overall returns to the enterprises so that they
can award their employees, and another share of returns is placed at their
disposal to further promote initiatives of this kind.

All in all, we enable enterprises to award people for the positive effect they help to produce, while also facilitating
the emergence of solutions that bring about these positive outcomes.

We give 25 percent of the returns to the workers, and another 10 percent go toward innovative technology. In our
view, this approach has been quite effective so far.

Vladimir Putin:
What is the average pay at the company?

Vladimir Potanin: The average pay is over 90,000 rubles, which is one of the highest
indicators for this sector.

In addition to this, we offer social
benefits that are quite generous. In particular, we help people move to the “mainland”
from Norilsk.

This year, we introduced new
benefits for our workers when we signed a new collective labour arrangement. It
now provides for healthcare services.

I have to acknowledge that we have
been paying relatively little attention to these matters recently. We understood
that we have to pay more attention to preventing and treating occupational illnesses,
also taking into consideration the harsh climate conditions.

For this reason, we decided to reshape the entire corporate healthcare framework, as well as set up additional
health centres with the necessary equipment and staff. We set a priority goal
of achieving progress within three or four years in the prevention and treatment of occupational and other illnesses.

Vladimir Putin:
But what about the performance in terms of output figures?

Vladimir Potanin: We produce over 200,000 tonnes of nickel, and over 350,000 tonnes of copper. This year, palladium and platinum output were also near all-time highs
due to high market demand on the back of tougher environmental regulations.
Consequently, more and more global car manufacturers need palladium and platinum for making emission control catalysts. For this reason, these
processes make us quite optimistic.

The current investment programme is
quite unprecedented with plans to invest more than $12 billion in expanding
output. This is a major breakthrough, Mr President, since for many years we
have been focusing on maintaining output rather than increasing it.

The tenor of ore is declining, so maintaining
output levels is quite a challenge, since we have to extract more ore. With
this new investment programme we will promote a transition from maintaining
output to a growth strategy.

This
programme runs through 2023–2024, by which time the output of commodity-grade metals
will have increased by between 20–25 percent with a 1.5-fold increase in ore
output. Our entire investment programme has been designed to deliver on this
objective.